Lawrence Wong
Singapore
“Sir, we will provide more information. I see the value of getting Ministries to put out more information, to share more about how their resources are being used and what outcomes they have achieved.”
“Sir, I agree fully with Mr Azhar that human capacity, human capital is critical. In fact, I would say the long-term potential of Singapore, how far we go really depends on us being able to maximise our human potential. That is key and that is why we have long invested in education. And it is not just about the investments.”
“Sir, we have been maintaining that commitment of 1% for some time now. I do not think it is about saying that we just have to do more and spend more. As many have highlighted, we want to ensure good outcomes from our R&D spending as well. So, we will continue if the outcomes are good.”
“This has never been the case. Temasek, when it started, was always very clear about its mandate from the very beginning – commercial, not doing national service, focused on commercial outcomes.”
“Sir, the MOF economists when they look at fiscal projections use Government's forecast of the economy, which is also published. We would typically use the mid-point of the range and then, of course, because these are in nominal terms, you have to factor for that. And the projections are done on those basis.”
“Sir, I was relieved that Mr Loh said he only has one question, but he asked the most difficult question. To answer the question, we will continue to monitor cost of living across all segments of society.”
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“There is no change to the provision, limiting the use of monies in the Government Securities Fund from being used solely for investment purposes. Therefore, the monies raised under the Bill cannot be used for spending. With the merger of the Acts, the current borrowing limits under the LTBA and GSA, which are $105 billion and $960 billion respectively, will be combined to form a single borrowing limit of $1,065 billion under the renamed GSA. There is no change to the overall borrowing limit. As is the practice today, the Monetary Authority of Singapore (MAS) will continue to calibrate Treasury Bill and SGS issuances based on market development needs. And to ensure transparency, MAS will continue to publish the breakdown of outstanding SGS and Treasury Bills. There is also no change to the existing features and outstanding issuances of Treasury Bills and Government Securities issued under the LTBA and the GSA. The outstanding Treasury Bills will be automatically subsumed under the renamed GSA. Besides the merging of LTBA into the GSA, this Bill will also repeal borrowing provisions in other Acts that are no longer necessary. Specifically, the Bill will repeal the External Loans Act and Treasury Deposit Receipts Act, as well as borrowing provisions in the Developmental Investment Fund Act. There are no outstanding borrowings under these Acts. So, with the SINGA and renamed GSA, the Government does not foresee the need to borrow under these Acts. The Constitution and other acts, such as the MAS Act will be amended to substitute references to LTBA and GSA with the renamed GSA, and remove references to the External Loans Act. The amendments to the Constitution will be raised by the Minister for Law after this.”
“This is an important safeguard, because the monies in the Government Securities Fund can only be invested. This is why the monies raised under the LTBA and GSA cannot be used to finance the Government's spending needs. While the LTBA and GSA were introduced separately with different processes, the Government has gradually harmonised the treatment of Treasury Bills and SGS over the years. For example, the LTBA was amended in 1996 to account for the proceeds and expenditures of Treasury Bills under the Government Securities Fund, instead of the Consolidated Fund, similar to Government securities in the GSA. In 2001, the minimum denomination for Treasury Bills of $10,000 was revised downwards to $1,000 to facilitate greater retail participation, similar to that for tradable securities under the GSA. And in 2004, the GSA was amended to change the borrowing limit of Government securities issued from a gross to a net limit for a more meaningful measure of Government's liabilities, similar to that for Treasury Bills under the LTBA. So, given the overlaps in purpose and the harmonisation of treatment of securities under both Acts, this Bill is therefore introduced to merge the LTBA into the GSA. The Government Securities Act will be renamed as the Government Securities (Debt Market and Investment) Act, which I will refer to as the renamed GSA for short, to reflect this consolidation within the name of the Act. The renamed GSA will provide for the issuance of Treasury Bills and the existing LTBA will be repealed. The changes introduced through this Bill are largely administrative in nature with no change to the substance of the individual Acts.”
“Mr Speaker, I beg to move, "That the Bill be now read a Second time". Sir, earlier this year, this House debated and passed the Significant Infrastructure Government Loan Act, or SINGA for short, to reactivate Government borrowing for financing nationally significant infrastructure, subject to strict safeguards. The borrowings under SINGA are clearly distinguishable from a separate category of Government borrowing for non-spending purposes under the Local Treasury Bills Act, or LTBA, and the Government Securities Act, or the GSA. The LTBA and the GSA allow the Government to borrow, not for spending, but for specific purposes, such as market development and meeting the investment needs of the Central Provident Fund. To emphasise, the proceeds from such borrowings cannot be spent by the Government. So, to delineate between the two types of borrowing in legislation, the borrowings which are done under SINGA for SINGA projects and borrowings which cannot be spent, this Bill before the House seeks to merge the LTBA into the GSA, and to streamline our legislation on Government borrowings. This will help to provide better clarity on the profile of the Government's debt. Let me share some background on the LTBA and the GSA. The LTBA authorises the issuance of Treasury Bills to develop the domestic short-term debt market and to meet market demand for short-term Government debt securities. The GSA authorises the issuance of longer-tenor securities, like the Singapore Government Securities, or SGS, to develop the domestic debt market and meet the investment needs of the Central Provident Fund. Both the LTBA and the GSA expressly provide that the proceeds of borrowings raised are to be paid into the Government Securities Fund.”
“As a major international financial centre, Singapore will always face the risk of illicit financial flows. What is important is that we supervise our FIs well, and take strong enforcement actions where necessary to reduce this risk as much as possible. MAS has been doing this and will continue to do so.”
“As ICIJ itself is careful to acknowledge, there are legitimate reasons to set up offshore structures, such as for investment and estate management. However, offshore structures often lack transparency and are thus vulnerable to abuse for illicit activities. Hence, MAS has clear requirements for FIs in Singapore to identify and verify the identities of persons who are beneficial owners or effective controllers of their customer accounts. FIs must understand the reasons for the use of such structures, take measures to ascertain that the assets held in these structures are not illicit and scrutinise any unusual transactions as part of their ongoing monitoring of the account. MAS also supervises the FIs to ensure that their boards and management have implemented robust controls against money laundering and terrorism financing. Where there are breaches of AML/CFT requirements, MAS has taken strong enforcement action. In fact, both the licensed trust companies in Singapore mentioned in the Pandora Papers have already been subject to MAS’ supervisory or enforcement actions. One of them, Asiaciti Trust (Singapore) Pte Ltd, paid a composition penalty of $1.1 million imposed by MAS in July last year for its failure to implement adequate AML/CFT policies and procedures. The other trust company, Trident Trust Company (Singapore) Pte Ltd, was directed by MAS in September last year to remediate weaknesses detected in its risk assessment controls during MAS’ supervisory surveillance. Both companies were under intensified scrutiny by MAS before they were mentioned in the Pandora Papers. Let me assure this House that Singapore takes the integrity of our financial sector very seriously.”
“Sir, as a global financial centre, Singapore intermediates a large volume of fund flows for investment or commercial purposes and also provides services in financial asset management. While the vast majority of these activities are carried out by law-abiding individuals and companies, we are constantly on guard against the risk of illicit financing activities. The Monetary Authority of Singapore (MAS) continually monitors and analyses information from a wide range of sources as part of its surveillance of money laundering and terrorism financing risks. This includes suspicious transactions reports filed by our financial institutions (FIs), information from intelligence sources, including those abroad and publicly available information, such as from independent investigations and media reports. MAS, therefore, takes seriously the recent disclosures in the Pandora Papers. The ICIJ has reported that 336 prominent individuals from around the world had established offshore structures to hold assets, assisted by 14 service providers operating in at least 38 jurisdictions. Two of the 14 service providers are foreign-incorporated trust companies with subsidiaries in Singapore that are licensed and regulated by MAS. Some ICIJ media reports also mentioned that many of these individuals had foreign bank accounts linked to these structures, in various financial centres including Singapore. Based on MAS’ assessment and information available thus far, the Pandora Papers have not raised significant concerns over the money laundering and counter terrorism financing (AML/CFT) controls of our FIs. Nevertheless, MAS is engaging the relevant FIs to assess if tightening of controls is warranted.”
“Mr Speaker, Sir, may I have your permission to answer all the Parliamentary Questions (PQs) related to the recent disclosure by the International Consortium of Investigative Journalists (ICIJ) of confidential information, dubbed the “Pandora Papers” together? This includes Question Nos 1 and 2 from Dr Lim Wee Kiak and Mr Patrick Tay filed for today’s Sitting, the Written PQ from Miss Cheryl Chan Wei Ling filed for today’s Sitting, and the Oral PQ from Mr Murali Pillai filed for yesterday’s Sitting.”
“Payouts under the Jobs Support Scheme are based on data on CPF contributions and wages. The CPF Board audits employers to check the accuracy of CPF contributions paid and wages declared. The CPF Board is also piloting the CPF Contribution Alert which allows employees to receive personalised notifications when their monthly CPF contributions are credited. Employees can conveniently verify the wages declared by their employers and CPF contributions paid by their employers against their payslip. Employees and whistle blowers can lodge reports to the CPF Board for any non-compliance of CPF contributions.”
“As the Minister for Finance has indicated at Budget 2021, the Government is currently reviewing our carbon tax and will announce at Budget 2022 the revised post-2023 carbon tax level and indicate what we can expect up to 2030. Public consultation on the carbon tax has been ongoing as part of engagements under the Singapore Green Plan 2030, which include conversations on the need for a revised carbon tax and the trade-offs involved in our transition to a greener and more sustainable future. NCCS, MTI and agencies will also leverage other platforms, which may include REACH, to engage the public in the lead up to Budget 2022. The Government will also engage businesses on the potential impact of a higher carbon tax and how we can support them in pursuing green growth opportunities. Feedback received from the consultations will be taken into consideration in the review. The Government will provide a summary of relevant feedback at the appropriate time.”
“For companies that are managing well, we encourage them to return the JSS to us, or donate the JSS received to a charity of their choice. It is commendable that companies which were able to cope well with the crisis have declined to receive JSS or donated the JSS received. Some have asked to remain anonymous for internal organisational reasons. Meanwhile, there are also companies that have chosen to use the JSS in other responsible ways, such as providing additional training to upskill their employees or expanding their operations, hiring more Singaporeans as a result. We will need to study carefully the implications of publishing the list of organisations that have returned part or all of their JSS, balancing public recognition, requests for anonymity and the risks of placing undue pressure on other firms that have been using the JSS monies responsibly in other ways.”
“As of August 2021, 1,889 cases have been denied or had their JSS payout adjusted. Cases with strong corroborative evidence to support JSS abuse are reported to the Commercial Affairs Department (CAD) for further investigation and prosecution. As of August 2021, 10 cases are undergoing Police investigations. Besides IRAS’ anti-gaming checks for JSS, the CPF Board also audits employers to check the accuracy of CPF contributions paid and wages declared. The CPF Board is also piloting the CPF Contribution Alert which allows employees to receive personalised notifications when their monthly CPF contributions are credited. Employees can conveniently verify the wages declared by their employers and CPF contributions paid by their employers against their payslip. Employees and whistle blowers can lodge reports to the CPF Board for any non-compliance of CPF contributions. The JSS and other COVID-19 economic relief grants were meant to support businesses in this period of significant economic uncertainty. While the Government does not intervene in how business owners and board directors determine remuneration and bonuses for key executives, they are expected to practise good corporate governance and stewardship. In particular, a good practice is to exclude Government grants in the computation of a company’s financial performance for the purposes of determining remuneration and bonuses for key executives. This is because Government grants are not a result of the performance efforts of these key executives. We understand that the Singapore Institute of Directors will also be putting up some guidelines on best practices in remuneration governance soon.”
“The Government introduced the Jobs Support Scheme (JSS) in 2020 to provide rapid, broad-based wage support to help employers retain their local employees during the height of the COVID-19 crisis. JSS payouts are computed based on actual mandatory employer CPF contributions made to bona fide employees. The CPF Act requires employers to make CPF contributions on wages payable to their employees, subject to the prevailing wage ceilings. Employers will not receive JSS payouts if they fail to make CPF contributions for their employees for the respective reference month. Similarly, if employers cut wages for their employees during the respective reference month, their JSS payout will be correspondingly reduced. In other words, the JSS is designed as a reimbursement to help employers offset part of the wages already paid to their employees. Announcing the timing and schedule of JSS payouts allowed employers to take these payouts into account and retain local workers despite the challenging economic circumstances during the pandemic. We also capped the Government’s co-funding under the JSS to the first $4,600 of gross monthly wages paid to each local employee. This means that employees and senior executives whose gross monthly wages are higher than $4,600 will have a lower effective JSS support. Given how JSS payouts are computed, MOF does not track the data that Mr Zhulkarnain asked about. To prevent abuse of JSS, IRAS, as the administrator of JSS, has instituted a robust anti-gaming framework since the first JSS payout in April 2020. For cases with high risk of fraud, such as irregular CPF contributions to get higher JSS payouts, IRAS requires the firms to authenticate their CPF contributions before the payouts are released.”
“The total Assessable Income for personal income tax for Year of Assessment (YA) 2020 is S$208.3 billion. The total Assessable Income earned by all persons in each decile for YA2020 are as follows:”
“Today, housing developers purchasing residential sites can qualify for upfront ABSD remission of 25%, if they meet specified conditions for the commencement and completion of development, and sale of all units within the residential development. These conditions for the ABSD remission for housing developers ensure the timely commencement and completion of development, and sale of residential units, and encourage developers to bid for land prudently. The existing conditions for the ABSD remission already differentiate between licensed housing developers (developing five or more residential units) and non-licensed housing developers (developing four or less residential units). As part of these conditions to qualify for the ABSD remission, licensed housing developers and non-licensed housing developers need to sell all units within five years and three years from the site acquisition date respectively. The Government regularly reviews the ABSD framework. The ABSD sale timeline of five years for licensed housing developers and three years for non-licensed housing developers remain relevant. For licensed housing developers, about 85% or more of developments met the five-year ABSD sale deadline in 2019 and 2020. For non-licensed housing developers, about 90% of developments met the three-year ABSD sale deadline in 2019 and 2020.”
“MOF has earlier explained that we will adjust our corporate tax system to preserve our taxing rights in response to Pillar 2. This may yield some additional revenue. But the final impact on our fiscal position must include the expected adverse revenue impact under Pillar 1. Furthermore, in a post-BEPS world, we must expect competition for jobs and investment worldwide will be more intense. So even if we were to get additional tax revenue from Pillar 2, we will need to use these resources to strengthen our capabilities and stay competitive.”
“Mr Chua has asked for data on the 1,800 multinational enterprise (MNE) groups likely to be affected by the ongoing international discussions on Base Erosion and Profits Shifting (BEPS), specifically the global minimum effective tax rate under Pillar 2. Presumably Mr Chua’s intention is to ascertain the tax revenue we can gain from raising taxes for the companies affected under Pillar 2. But the current available data does not permit an easy estimate for the impact of Pillar 2. In particular, Pillar 2 is meant to be applied on a group basis, not on an entity basis. The group-level data will not be the simple sum of the data of entities within a group. Much of the group-level data needed for ascertaining the impact of Pillar 2 are not present in our current corporate tax returns. More importantly, the ongoing BEPS project is a challenging development for small economies like Singapore. Let me explain why. First, under Pillar 1, 25% of the residual profits, defined as profit in excess of 10% of revenue, will be allocated away from where the economic activities are conducted to where the markets are. This means that Singapore will suffer corporate tax revenue losses. The magnitude of fiscal impact would only be clear after international negotiations have been concluded and after companies in due course adapt their business decisions. Second, Pillar 2 of the multilateral consensus includes a global minimum effective tax rate of 15%. This means that in whichever jurisdiction a MNE group operates, the group’s effective tax rate in that jurisdiction cannot be lower than 15% or there will be additional taxes levied by other jurisdictions elsewhere. Pillar 2 will therefore limit the effectiveness of tax incentives as a tool for attracting investment.”
“As of end-September 2021, the Government has recovered $361 million (97.6%) from 4,862 firms. The monies were recovered mainly through offsets against firms’ subsequent JSS payouts (where applicable), as well as returns in cash by large enterprises. The Government expects to recover an additional $6.8 million (1.8%) by March 2022 bringing the total expected recovery of JSS overpayment to $367.8 million (99.4%). The recovery will be through offsets against future payouts of other enterprise support schemes, such as the Jobs Growth Incentive Scheme (JGI) and Wage Credit Scheme (WCS), as well as commitments by firms to repay the amounts. For the remaining $2.2 million (0.6%) owed by 274 firms, the firms can either return these amounts in cash via lump-sum or instalment payments. As the firms’ circumstances vary, the Government will tailor our recovery approaches to the different types of circumstances and seek to recover as much as possible of the overpaid amounts.”
“(proc text)] [(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)] [(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Lawrence Wong]. (proc text)] [(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]”
“And he is absolutely right because beyond our short-term fiscal response to COVID-19, we are mindful of our long-term fiscal responsibility to maintain a balanced and sustainable Budget position. Our prolonged fight against COVID-19 has been facilitated greatly by our ability to tap on Past Reserves for extraordinary measures to protect lives and to safeguard livelihoods. But beyond these emergency conditions, when it comes to recurrent expenditure, ongoing expenditure, I think it is very important that we maintain the principle to fund them through recurrent revenues. As our recurrent expenditures continue to go up for a whole range of reasons, including rapidly ageing population, the need for more healthcare, to make growing demands for social spending, then we have to ensure that we look at raising our recurrent revenues to meet these recurrent expenditures. So, there is no avoiding this. Of course, it is never easy to implement a tax increase, let alone a GST increase. The Government has announced that the GST rate increase will take place sometime during 2022 to 2025. This remains unchanged and we will continue to consider all factors, including our fiscal needs as well as the prevailing economic conditions in deciding on the timing of the GST rate increase. At the end of the day, we must have the courage to make the difficult decisions that are necessary to uphold a culture of fiscal stewardship and fiscal responsibility. That is how we can best serve the interests of Singaporeans, both in the current as well as in the future generations. Mdm Deputy Speaker, I believe I have addressed Members' concerns and questions. Mdm Deputy Speaker, I beg to move. [(proc text) Question put, and agreed to.”
“In fact, we already have a form of wealth tax by way of the tax levied on private residential properties today which is tiered according to annual value (AV). So, we already have that structure in place in our property tax system. I am unable to reveal what we are thinking about now. I think that will be premature and I do not want to pre-empt the Budget next year. But, obviously, we are continuing to consider all options to address, as I have said, number one, income and wealth inequalities; and number two, what more we can do to support SMEs. Where SMEs are concerned, I think the data is very clear. I think it is useful to bear in mind when you look at the data, it is not a homogenous group; it is very diverse. And, therefore, if you look at averages or you look at effective tax rates, one can get a misleading picture. Because, in fact, the vast majority of SMEs, vast majority of them, pay very little tax. That is the reality. We also need to be careful when we look at reliefs and exemptions for SMEs that we do not want to have inadvertent consequence. This discourages them from growing because if they stay small, they pay less tax, I think that will be unhelpful for our SMEs to scale up and grow and develop to become global champions in their own right. So, we need to find the right incentives to support them but, at the same time, encourage them to scale up and grow. So, that is something that MOF, together with our economic agencies, continue to study carefully. And we will look not only at tax measures but also at non-tax measures, in other words, the kinds of support schemes we can provide to them through grants, loans and equity. Next, Mr Yip also highlighted the caution that we need to ensure that we spend in a fiscally sustainable manner.”
“Let me assure Members that IRAS does not act on baseless or frivolous allegations. IRAS will carefully examine not only the information provided by an informer, but also other information available to IRAS, and assess the validity of any allegations. IRAS will only commence an investigation when it assesses that a prima facie case exists for tax evasion and if the information provided by the informer proves to be reliable and accurate. Apart from IRAS' internal process, the POI provision includes a legislated safeguard, similar to the POI provisions in other domestic legislation, which will mitigate against the risk of informers making false claims. In particular, the safeguard provides that the Court may require the production of the original complaint and full disclosure of the informer's identity only if the Court is satisfied that the informer wilfully made in his complaint a material statement which he knew or believed to be false or did not believe to be true; or justice cannot be fully done between the parties without the disclosure of the informer's identity. So, these safeguards are in place. Let me now turn to some of the broader comments raised by Members. Mr Louis Chua mentioned wealth taxes and more reliefs and help for SMEs. I would say, in terms of direction, what Mr Louis Chua has suggested is completely aligned with MOF's thinking. We want to address wealth inequalities and we want to do more to support our SMEs. So, in terms of policy intent, we are completely aligned. But to address wealth inequalities, what exactly do we do? What sort of measures do we put in place? That is something that we will have to study carefully.”
“In the event of a breach, the appointed firm will be liable to legal actions under the terms of the appointment contract and penalties under our Acts governing the data. Let me assure Members that the Government takes this issue very seriously, and safeguards would be put in place to protect the confidentiality of taxpayers' information and to minimise the risk of unauthorised disclosures and the misuse of tax data. Next, Mr Yip asked about the methods of audits on the disbursement of schemes like the JSS. IRAS, as the administrator of the JSS, had instituted a robust anti-gaming framework, making use of data from multiple sources to identify and detect abuse. While we are unable to share the specifics of IRAS' anti-gaming operations for good reasons – if you tell people what we are doing, I think it will encourage more gaming behaviour – this framework has been in place since the first JSS payout in April 2020. For cases suspected of higher fraud risks, IRAS requires the firms to authenticate their CPF contributions before the payouts are released. Cases with strong corroborative evidence to suggest abuse are reported to the Commercial Affairs Department (CAD) for further investigation and prosecution. I also thank Mr Yip for his support for the introduction of the Protection of Informers, or POI, provision in the Income Tax and other tax Acts. Mr Yip asked about whistle-blower protection in other statutes. In fact, the proposed POI provision in this Bill is modelled after similar provisions in the Customs Act and the Cybersecurity Act 2018. The legislative amendment to better protect informers will also apply to other tax Acts, beside the ITA. Mr Wee asked how we will prevent people with malicious intent from falsifying claims against their rivals or competitors.”
“The audits provide independent checks to ensure IRAS disburses payouts correctly to their intended beneficiaries and the data provided to auditors will be limited to what is necessary for quality assurance of that specific scheme. For example, annual revenue data would be provided to auditors to determine the eligibility of SMEs for the Rental Support Scheme. As revenue size is not part of the scheme design for the Jobs Growth Incentive, such data will not be shared with auditors for the Jobs Growth Incentive. So, the Comptroller of Income Tax will have the discretion to decide on the extent of information that needs to be made available, subject to the safeguards that I have explained. More importantly, as I mentioned earlier in my speech, the data made available will not be identifiable. Various methods like tokenisation would be used to prevent the disclosure of individual data. Authorised persons who are granted access to protected data will be prevented from retaining or making copies of the data provided in the first place. In other words, they can only access data on IRAS-issued devices and only within IRAS' premises. So, there is no issue of external auditors storing data for excessive amounts of time. Authorised persons who are granted access to protected data would be required to make and subscribe to a declaration of secrecy. It would be an offence under the ITA and the Official Secrets Act for authorised persons to disclose any protected information to other parties. Appointed audit firms will also be required to adhere to contractual terms on data confidentiality and ensure that the use of confidential information is only for authorised purposes.”
“If the DAF is an IPC or an approved grant-maker, the same reporting requirements applicable to IPCs and approved grant-makers would then apply respectively. On the issue of tax deductions for donations, Mr Wee had proposed for the Government to tier the tax deduction rates based on the donation quantum. I understand the intent of such a suggestion but such a tiered system would then primarily benefit the higher-income as well as larger IPCs who have the resources to engage higher-income donors. Mr Wee's suggestion to provide 300% or 400% tax deductions will also result in more tax revenue forgone. And Mr Louis Chua, likewise, had suggested to make permanent this tax deduction. Again, I appreciate the intent of Mr Louis Chua and Mr Don Wee to promote philanthropy and charitable giving. But we have to consider the merits and trade-offs carefully, bearing in mind that we currently have one of the highest tax deduction rates for donations in the world and we want to make sure that any scheme we have in place is fiscally sustainable. In addition, besides tax deduction, the Government also adopts a multi-faceted approach to encourage charitable giving within the community. So, let us not just look at tax alone. Let us look at what we do with regard to non-tax measures as well. And we will continue to review both the tax and non-tax measures to do more for charitable giving. Next, several Members asked about data confidentiality issues regarding audits on the administration of public schemes. In my speech, I mentioned that safeguards are provided for in the Bill to minimise the risk of unauthorised disclosures and the misuse of tax data.”
“We do not track this data specifically because tax-deductible donations are currently tracked based on IPC and approved grant-maker status, and this is in line with requirements for the receipt of tax-deductible donations under the Charities Act and the Income Tax Act respectively. I understand Mr Ng's concerns over ensuring the timely disbursement of funds by DAFs to IPCs. So, for DAFs which are themselves IPCs, they have flexibility to disburse the funds for the charitable programmes, no different from other IPCs. But I think Mr Ng is more concerned about DAFs which are approved grant-makers. For such DAFs, they are required to disburse the tax-deductible donations to IPCs within five years from receiving the donations. The only exception is when an endowment fund is being set up by the approved grant-maker, in which case the approved grant-maker can disburse the tax-deductible donations to IPCs over a longer period, obviously because they are setting up an endowment fund. To ensure accountability, all grant-makers are required to submit annual reports to IRAS on the tax-deductible donations received and disbursed. Thus far, all grant-makers have disbursed the donations received to IPCs according to the disbursement requirements within the specified number of years. So, Mr Ng can be assured that we do not have this scenario where donations are being made to grant-makers, but they hold back on disbursing grants to the charities. Mr Ng also asked about the information requested by IRAS when an individual attempts to claim tax deductions on their donations to a DAF. Again, IRAS does not separately request for information on tax-deductible donations to a DAF.”
“Mr Louis Ng asked about the new section 14ZH in the concerns that it may inadvertently reward a landlord who evicts a failed tenant and keeps the property vacant. This section is in line, again, with the existing tax treatment that IRAS applies up to now. The legislative clarification provides tax certainty for the taxpayers, namely landlords who are taxable on their rental income. So, under this section, as long as the landlord demonstrates with supporting evidence that he has made reasonable efforts to secure a tenant during the vacancy period, IRAS will allow tax deduction for qualifying expenses such as property tax, repair, insurance and maintenance of the property incurred during the vacancy period. So, what does the landlord have to demonstrate in order to show reasonable effort? For example, IRAS would request a taxpayer to provide supporting evidence such as documents showing that the repair was made to the property to keep it in lettable condition; or that a property agent was appointed to find a tenant; or that the property had been advertised for rent. And if IRAS is satisfied that reasonable efforts have been made to seek a tenant during the vacancy period, then this section will apply. But if IRAS is not satisfied that reasonable efforts have been made to secure a tenant, then the tax deductions will not be allowed. Next, let me address the points raised by Mr Ng with regard to donor-advised funds (DAFs). Mr Ng asked for data on the amount of income tax deductions linked with donations to DAFs.”
“For example, he asked if the option to accelerate the write-off of the cost of acquiring plant and machinery can be further extended for another year, in view of the current situation. I should say that each time we ask for additional requests for help for businesses or individuals, we should look at schemes in totality. It is not just one particular scheme but we have other schemes in place overall to encourage businesses to invest in new and emerging technologies to sharpen their competitiveness. For example, in Budget this year, we had extended the enhanced support levels of up to 80% for existing enterprise schemes like the Productivity Solutions Grant and the Enterprise Development Grant, to end of March 2022. We continue to monitor the situation closely and review all our schemes, as needed. Should there be a need to extend any measure, any such extension will then be announced at Budget 2022 and then it will be effected in next year’s Income Tax (Amendment) Bill. So, it is an ongoing process. Next, let me address the specific comments raised on other amendments outside of Budget and COVID-19 support measures. First, Mr Louis Chua asked about the new section 10P. This is a scenario where trading stock is appropriated for capital purposes. I must clarify first that this is an existing treatment. IRAS already practices this. But this is to codify the existing treatment, which is also similar to what is done in Hong Kong and the UK. Mr Chua asked about the disposal of property, plant and equipment. That is capital in nature. So, it is not considered as business trading stock in the first instance. So, there would be no appropriation of trading stock and section 10P does not apply under such a scenario.”
“Mr Don Wee had asked about qualifying expenses in relation to virtual trade fair that qualify for this scheme. Expenses incurred by firms on overseas advertisement and promotional campaigns on social media, including the engagement of influencers, are covered under the DTDi scheme. In this Bill, we will enhance the scope of the DTDi scheme to cover specified expenses incurred to participate in approved virtual trade fairs. These specified expenses include third-party costs for the design and production of digital collaterals and promotion materials for the approved virtual trade fair, and logistics costs incurred to send samples overseas to potential clients met at the approved virtual trade fair, subject to conditions. So, as you can see, we are talking about expanding the scope of qualifying expenses but we have continued to keep a cap on the overall amount at $150,000. Mr Wee asked if the double tax deduction, or DTD scheme for qualifying upfront cost attributable to retail bonds issued under MAS’ Bond Seasoning and Exempt Bond Issuer Frameworks can be extended to green bonds. The answer is yes. Green bonds which meet the qualifying criteria for the DTD scheme can qualify under the scheme. So, these are to address all the comments about Budget measures, COVID-19 measures which had been announced, but we are talking about the implementation and we want to assure Members that in working out the implementation details as reflected in the amendments in this Bill, we have been careful to make sure that the schemes are carefully and properly designed. Mr Don Wee then also asked about the further extensions of some of the schemes, beyond what had been announced.”
“Mr Yip also asked about tax deductions on provisions of doubtful debts and the diminution of value of investments under section 14I of the Income Tax Act. This is only available for banks and qualifying finance companies, and is subjected to caps to safeguard against excessive provisions. This existing tax deduction aims to promote the overall soundness and stability of our financial system by catering for the building up of adequate provisions to cushion against potential losses in the financial institutions’ loan and investment portfolios. The change, which is to be incorporated into this Bill, expands the scope to include specified loans and securities in line with financial reporting standards. Again, there is no change of the prevailing caps in the Bill. Mr Yip was also concerned about tax exemption for packaging costs. I wish to clarify that packaging costs, like any business expense incurred in the production of income, can only enjoy 100% tax deduction. There is no further tax break. There were also some questions on the Double Tax Deduction for Internationalisation, or DTDi scheme. That covers, amongst others, specified expenses incurred in the design of packaging for overseas markets. These expenses are design costs, not packaging costs. Such design costs include, for example, costs of third-party consultancy fees to design packaging for overseas markets. As part of the Budget 2021 measure, we have announced that design costs would be added to the existing list of automatic qualifying expenses under the DTDi scheme. Again, the overall cap remains unchanged at $150,000 per year for the list of qualifying expenses which taxpayers can claim in their tax return without the prior approval of Enterprise Singapore under the DTDi scheme.”
“Mdm Deputy Speaker, I thank Members Mr Louis Chua, Mr Louis Ng, Mr Yip Hon Weng and Mr Don Wee for their support for the Bill and their comments and suggestions. While this Bill is mainly to effect the extension of measures announced at the Budget this year and the various COVID-19 support measures that we have also announced earlier this year, Members have raised other suggestions and broader concerns. So, I will respond to these in turn. Let me start by responding to the comments on the Budget and COVID-19 support measures. I should clarify that the Bill gives effect to the implementation of measures that have been announced in the Budget and in the various COVID-19 support packages. These are not new measures. They really detail the implementation of measures that have been announced. I think Mr Yip had questioned if these exemptions were too generous. But to clarify, these are not new measures, they were announced earlier either in the Budget or in earlier statements and we are implementing them, and you would see that in the implementation of these measures, we have been quite careful in scoping them. For example, the Renovation and Refurbishment (R&R) measure mentioned by Mr Yip, allows taxpayers the option to claim tax deductions on qualifying expenditure over one year, instead of the three years which is already allowed under the Income Tax Act today. But we are just allowing now one year instead of three years. There is also no change to the overall cap of $300,000, which applies for every relevant period of three consecutive Years of Assessment. So, basically, we are allowing the option to claim tax deductions on an accelerated schedule which provides cash flow support to businesses during this period, but we have not changed the overall caps.”
“This amendment protects informers by prohibiting witnesses in Court, who might be the informers themselves, from disclosing information that may lead to the discovery of an informer’s identity and thus encourages informers to step forward with information that will enable more effective tax enforcement. Related amendments will be made to the GST Act, Property Tax Act, Stamp Duties Act, Betting and Sweepstake Duties Act, Private Lotteries Act and Estate Duty Act. Clauses 50, 55 to 60 of the Bill provide for these amendments. Mdm Deputy Speaker, I beg to move. [(proc text) Question proposed. (proc text)]”
“As part of the quality assurance process to ensure that public schemes are administered as intended, such as disbursing the correct amount of payments to eligible firms, IRAS needs to work with external auditors to check and audit its scheme allotment. This includes checking against income tax data to verify a company’s eligibility for public schemes, for example, whether it is an SME. As the Income Tax Act restricts the disclosure of protected income tax data to non-public servants including external auditors, this amendment will allow persons authorised by the CEO of IRAS access to selected income tax data and documents, appropriately safeguarded, for the sole purpose of auditing the administration of public schemes. Safeguards are provided for in the Bill to ensure the proper usage of such tax data. In particular, the Comptroller of Income Tax will be able to restrict the extent of information that needs to be made available to the authorised persons. Authorised persons who are granted access to the protected data will be prohibited from copying or retaining the data, or disclosing the information to other parties. In addition, to protect data privacy, identifiers will be masked before any data is released to auditors under this provision. As a related amendment, we will also amend the Goods and Services Tax Act to allow access to Goods and Services Tax information to persons authorised by the CEO of IRAS to audit the administration of public schemes. Clauses 2 and 57 of the Bill provide for these amendments. Third, a protection of informers provision will be included, similar to the provision in legislation like the Customs Act and the Cybersecurity Act 2018.”
“In such cases, we will treat the market value of the trading stock on the date of appropriation as income at that juncture. Any gain, which is arrived at after deducting expenses, will then be subject to tax, while any loss is allowed as a deduction. This proposed amendment is necessary to protect our revenues. Because without this amendment, there would be revenue loss from deductions claimed by the taxpayer when the asset was held as trading stock, whereas any gain on the subsequent disposal of the asset will be treated as capital in nature and not subject to tax in Singapore because we do not have a capital gains tax. Conversely, non-trade or capital assets may become trading stock. For example, a property developer may choose not to hold its investment property and redevelop it for sale. When the redeveloped property is subsequently sold, the gains are computed and subject to income tax. The proposed amendments provide that in computing such gains, the cost of the trading stock is its market value on the date the asset, in this instance the investment property, becomes trading stock. Clauses 3, 20, 21, 27 and 61 of the Bill provide for these amendments that pertain to the clarification of our tax rules for the purposes where trading stock is appropriated for non-trade or capital purposes and vice versa. Second, we will facilitate IRAS’ effectiveness when it administers public schemes. Over the past two years, we have introduced and enhanced many support measures, like the Jobs Support Scheme and the Jobs Growth Incentive, to help businesses and workers. IRAS has stepped up to support this effort by centralising and taking on the business disbursement functions for nine such schemes, which will be added to the Ninth Schedule of the Act.”
“Likewise, to continue supporting corporate volunteering, the Business and IPC Partnership Scheme (BIPS) has been extended for another two years to CY 2023. Clauses 14 and 29 of the Bill provide for these amendments. We hope this will continue to encourage Singaporeans to give back to the community. Fourth, mandatory or voluntary monetary support payments that tenants receive from their landlords in 2021 will not be taxed. This will allow tenants to benefit from the full amount of the monetary support payments. Landlords will also be allowed to claim income tax deductions for these monetary support payments they made to tenants in 2021. This is to facilitate the passing on of rental waivers granted to master tenants of qualifying Government-owned commercial properties to their sub-tenants, as well as the making of monetary support payments by landlords to their tenants in 2021. Clauses 7, 16 and 19 of the Bill provide for these amendments. MOF regularly reviews and refines the income tax regime. Let me now touch on three key amendments among the 25 amendments in the Bill, arising from this periodic review of our tax regime. First, we will set out the tax treatment for two situations: where trading stock is appropriated, or used, for non-trade or capital purposes, and vice versa. In other words, where capital assets become trading stock. IRAS’ current tax treatment of such situations is similar to the practice and case law of the UK. The proposed amendments will now codify this current tax treatment into our tax legislation. Trading stock held by taxpayers may be appropriated for non-trade or capital purposes. For example, a property developer may decide to stop trying to sell unsold units and instead keep them for long-term capital gains.”
“Mdm Deputy Speaker, I beg to move, "That the Bill be now read a Second time". The Income Tax (Amendment) Bill covers 38 amendments. Of these, 13 amendments arose from the Budget Statement in February 2021, as well as COVID-19 support measures announced earlier this year to help workers and businesses. Another 25 amendments arose from the periodic review of Singapore’s income tax regime. We have sought views from the public on the draft Bill earlier this year and have taken into account the feedback received. We thank all the contributors for their inputs. Let me start with the key amendments that give effect to the 2021 Budget Statement and the support measures announced earlier this year. First, to help businesses with cash flow, the enhancement to the Loss Carry-Back Relief scheme has been extended for another year. Qualifying deductions for the Year of Assessment (YA) 2021 may be carried back up to three preceding YAs, instead of one. The amount of qualifying deductions that may be carried back is capped at $100,000. This allows businesses to get a refund of up to $17,000 of income tax paid for YA 2018 to YA 2020. Clause 32 of the Bill provides for this amendment. Second, the scope of the Double Tax Deduction for Internationalisation (DTDi) scheme has been enhanced to cover additional qualifying expenses, for example, specific expenses incurred to participate in approved virtual trade fairs. Clauses 8 and 11 of the Bill provide for these amendments. This is to help us encourage our firms to internationalise. Third, the 250% tax deduction for qualifying donations to Institutions of Public Character (IPCs) has been extended for another two years to Calendar Year (CY) 2023.”
“Thank you. Other forms of authentication and whether you can allow customers to opt out. MAS does not prescribe. The financial institutions are required to implement multi-factor authentication mechanisms. It can include SMS OTP but they can include other forms of multi-factor authentication. Each one will potentially be susceptible to perpetrators trying to take advantage of any possible weakness. It is a continuous process where the financial institutions have to review the type of authentication mechanisms which they would like to use, commensurate with the risk level of the financial transaction and the sensitivity of the data involved. As for allowing options for customers, it is something that MAS can engage the banks on, to see if the banks will be prepared to give more options for customers who feel they would prefer something more secure. But I must say whatever you put in place, the perpetrators will always be looking out for new ways to identify vulnerabilities and weaknesses. So, this has to be a continuous effort to make sure that our systems remain secure and it requires continued vigilance by regulator, financial institutions and customers, importantly.”
“Sir, let me just take these three questions in turn. First, as I mentioned in my reply, IMDA is putting in place some safeguards with regard to how the telcos operate. In this instance where it comes to SMS OTP diversion, the perpetrators needed to do several things. One, they would have obtained the victim's personal and financial information and mobile phone number already. That would have been compromised already, through malware, through phishing, whatever methods they would have gotten that information. Second, the perpetrators would have gained access to a few overseas telco networks to compromise their system. Then, they would fraudulently modify the location details of the targeted victims as though these victims were overseas. Then, you make a transaction and the bank sends an SMS OTP through this overseas network. And that is how, with the compromised credit card credentials, the fraudulent transaction is made. And so, as I mentioned just now, telcos are already putting in place additional safeguards, for example, specialised firewalls and other system safeguards to monitor and block suspicious diversions of SMS. This would include, for example, knowing where an individual's location is, and if you suddenly see the change in location, a red flag may be triggered, and then, the telco would then have safeguards in place to prevent the SMS from being diverted. These system safeguards are being worked on by telcos. On the second question, can you please repeat the second question?”
“Mr Speaker, as I mentioned in my reply just now, we have not seen any confirmed cases of SMS OTP diversion. I emphasise, we are talking about SMS OTP diversion fraud cases. We have not seen any confirmed cases up to now, prior to September. But the banks, as I mentioned just now, are investigating any further reports by consumers and customers, and these will include transactions that occurred before September 2020, taking into consideration this new revelation or this new finding that some of these SMS OTPs could have been diverted and we would take that into consideration in resolving these cases. Certainly, if any subsequent report were to be made and found to be linked to SMS OTP diversion, the cases would be resolved as with the 75 cases that I highlighted, which means that for affected customers, the banks will waive the unauthorised transactions, so long as the customers have taken the necessary care to protect their card information and authentication credentials. Going forward, for future cases, whether it is due to SMS OTP diversion or other fraudulent methods, I have mentioned before in this House that we have a Payments Council. They are reviewing guidelines and responsibilities for customers as well as financial institutions to clarify responsibilities and liabilities. Ultimately, everyone needs to play their part: financial institutions will have to do so, customers will have to do so. If we clarify what the responsibilities and guidelines are, then, hopefully, we can continue collectively to do more to guard against such fraudulent transactions.”
“Banks work with SPF, National Crime Prevention Council (NCPC) and MoneySense, our national financial education programme, to regularly alert consumers to new methods adopted by scammers and to educate consumers on how they can protect themselves. Consumers must also develop a healthy scepticism about websites, unsolicited phone calls, messages and emails. When making online purchases, they only should use established and reputable online services. If there is any doubt about a merchant’s legitimacy, do not proceed with the transaction. And be wary of any deal or offer that sounds too good to be true. Second, consumers should set transaction notification thresholds at low levels so that unauthorised transactions are detected early. Banks work closely with SPF and Anti-Scam Centre to exchange intelligence on emerging scam trends, so that they can take prompt action. The sooner a report is made, the higher the likelihood that the funds can be recovered. Where bank customers suffer financial losses from fraudulent transactions, they are protected as long as they have acted responsibly. Banks are expected to consider whether the customers could have taken reasonable steps to prevent the occurrence of the fraudulent transactions. Bank customers will not have to incur any losses which arise from the banks’ non-compliance with MAS’ rules. Let me reiterate: fighting fraud is a collective effort. As criminals will continue to perpetuate new and more sophisticated methods to defraud consumers, banks, consumers and the authorities need to remain vigilant in preventing as well as detecting fraudulent transactions. MAS will continue to work with all stakeholders to ensure that e-payments remain safe and secure.”
“Likewise, bank customers too have a responsibility – to protect their online banking and payment credentials for authentication such as passwords and OTPs, by inputting them only on official websites or mobile applications. These should never be disclosed over the phone, via text message or email. Mr Giam had asked about the measures taken by banks and telecommunication companies to safeguard against the SMS OTP diversion attack. While banks’ systems were secure and not the cause of these incidents, banks have further enhanced their fraud surveillance measures. This includes rejecting card payments made to common merchants linked to the unauthorised transactions. Banks will continue to closely monitor the evolving cybersecurity landscape, and regularly review authentication mechanisms and other security measures put in place to address risks posed to customers using online financial services. As for the local telecommunication networks, IMDA, in consultation with the Cyber Security Agency of Singapore (CSA), has required telco operators to put in place specialised firewalls and system safeguards to monitor and block suspicious diversions of SMS. As Ms Pereira highlighted, consumers need to also take action to protect themselves. Allow me to share a few actions which consumers can focus on. First, consumers must assume that criminals will try to obtain their online banking credentials. Criminals typically do this by tricking consumers into installing malware on their devices or disclosing their online banking username and passwords through phone calls or fake websites. When in doubt, consumers should call the banks’ official hotlines to verify the legitimacy of requests for online banking and card credentials.”
“Sir, MAS, the Infocomm Media Development Authority (IMDA) and the Singapore Police Force (SPF) announced on 15 September that malicious actors overseas had diverted and used SMS OTPs to perform fraudulent credit card transactions between September 2020 and December 2020. Seventy-five bank customers in Singapore had been affected. Banks have reached out to all the affected customers to waive the unauthorised transactions, amounting to approximately S$500,000. There have been no confirmed cases of SMS OTP diversion in Singapore prior to September 2020. Banks are reviewing all card dispute cases reported to them from September 2020, to identify if there may be other fraudulent transactions that were enabled by SMS OTP diversion. Banks will similarly investigate any new reports by customers, including any such transactions before September 2020. Bank customers will not have to bear any unauthorised charges in cases which are confirmed to have been enabled by SMS OTP diversion, as long as customers had taken care to protect their card information and authentication credentials. So, bank customers will not have to bear any such unauthorised charges so long as they had taken care to protect their card information and authentication credentials. Sir, this attack has shown us that the fight against scams and fraud requires collective effort. Banks have a responsibility to secure their IT systems, put in place robust measures to authenticate customer transactions and conduct active surveillance to detect unusual transactions patterns. They are required to institute robust security controls to safeguard customers’ account information and transaction data from unauthorised access and misuse.”
“Mr Speaker, Sir, aside from Dr Tan's Parliamentary Question (PQ), Member Ms Joan Pereira had filed similar PQ yesterday and Mr Gerald Giam1 had also filed a PQ on this matter. So, with your permission, may I take all these PQs related to the Monetary Authority of Singapore's (MAS') recent announcement on the SMS one-time password (OTP) fraud, at the same time.”
“The Government has implemented various schemes to protect lives and livelihoods during this COVID-19 pandemic, through supporting businesses and households. Recognising that both tenants and landlords have been affected by the pandemic, our approach has been to strike a balance between the needs of the two groups through the design of our support schemes. As first announced during the Ministerial Statement in Parliament on 26 July 2021, the Government will require landlords to provide two weeks’ waiver of gross rent to eligible tenants, to help tenants cope with the impact of the period of Phase 2 (Heightened Alert) from 22 July to 18 August. Tenants which are Small and Medium Enterprises or Non-Profit Organisations must meet the eligibility criteria to qualify for this treatment, such as experiencing a 20% drop in revenue, to ensure that the rental assistance is directed to the more severely affected tenants. Hence, not all landlords have to provide this waiver. Provisions are also in place to take into account the difficulties of landlords who rely mainly on rental income for their livelihood and face genuine difficulties in sharing the burden with their tenants. Landlords can apply for relief, to be assessed by an independent Rental Waiver Assessor based on specific factors in each case. If landlords meet the criteria, the Assessors can exempt them from providing rental waiver. Some landlords may still face cashflow constraints as a result of the mandated two-week rental waiver. The three local banks have committed to provide targeted assistance and restructuring solutions to borrowers. Landlords that face challenges meeting loan repayments should work with their lenders on suitable relief and restructuring options that are tailored to their circumstances.”
“For companies with turnover exceeding S$100 million, or "non-SMEs", which have positive accounting profits: (a) The total revenue was S$1.5 trillion in YA 2010 and S$3.4 trillion in YA 2019. (b) The total accounting profit before tax was S$130 billion in YA 2010 and S$477 billion in YA 2019. (c) The total chargeable income before taking into account the reduction of income via (i) group relief, (ii) loss carry back, (iii) partial tax exemption and (iv) start-up tax exemption schemes, was S$52 billion in YA 2010 and S$131 billion in YA 2019. (d) The total corporate income tax paid was S$6.2 billion in YA 2010 and S$10.4 billion in YA 2019. (e) The average ETR, using chargeable income before group relief, loss carry back, partial tax exemption and start-up tax exemption schemes, was 10.8% in YA 2010 and 10.0% in YA 2019. The average ETR of companies is computed as a simple average (or arithmetic mean) of the effective tax rates of the respective companies in their respective years.”
“Based on IRAS data for the Year of Assessment (YA) 2010 to YA 2019, for companies making accounting profits: (a) The total revenue was S$1.8 trillion in YA 2010 and S$3.8 trillion in YA 2019. (b) The total accounting profit before tax was S$195 billion in YA 2010 and S$593 billion in YA 2019. (c) The total chargeable income before taking into account the reduction of income via (i) group relief, (ii) loss carry back, (iii) partial tax exemption and (iv) start-up tax exemption schemes, was S$79 billion in YA 2010 and S$168 billion in YA 2019. (d) The total corporate income tax paid was S$9.8 billion in YA 2010 and S$15.0 billion in YA 2019. (e) The average effective tax rate (ETR), using chargeable income before group relief, loss carry back, partial tax exemption and start-up tax exemption schemes, was 5.1% in YA 2010 and 4.3% in YA 2019. For companies with revenue of up to S$100 million, or "SMEs", which have positive accounting profits:– (a) The total revenue was S$297 billion in YA 2010 and S$402 billion in YA 2019. (b) The total accounting profit before tax was S$65 billion in YA 2010 and S$116 billion in YA 2019. (c) The total chargeable income before taking into account the reduction of income via (i) group relief, (ii) loss carry back, (iii) partial tax exemption and (iv) start-up tax exemption schemes, was S$27 billion in YA 2010 and S$37 billion in YA 2019. (d) The total corporate income tax paid was S$3.6 billion in YA 2010 and S$4.5 billion in YA 2019. (e) The average ETR, using chargeable income before group relief, loss carry back, partial tax exemption and start-up tax exemption schemes, was 4.9% in YA 2010 and 4.2% in YA 2019.”
“There are monthly business briefings to entities about the benefits of InvoiceNow and direct engagements to onboard them. Efforts have also been taken to ensure the readiness of solution providers to facilitate a smooth onboarding process for vendors. Low- to no-cost options to onboard InvoiceNow have been established for smaller businesses and IMDA had a $200 E-invoicing Registration Grant (ERG) to encourage entities to join InvoiceNow by 31 December 2020. Specifically, for public sector vendors, briefings were conducted and guides were circulated to encourage adoption. Targeted engagements are also being done for larger public sector vendors.”
“Government Ministries, departments and Statutory Boards (the public sector) achieved 96.2% prompt payment rate in Financial Year (FY) 2018, that is, a late payment rate of 3.8%, reaching our target late payment rate of below 5%. The public sector has maintained the late payment rate below 5% since FY2018 and achieved further improved prompt payment rates of 98% in FY2019 and 98.2% in FY2020. The public sector has ensured prompt payments through (a) streamlining of the procure-to-pay processes, (b) full adoption of e-invoicing, (c) leveraging on data analytics to enable public sector agencies to track, monitor and intervene on potential late payments and (d) having senior management support and attention at agencies to collectively drive the prompt payment efforts across the public sector. InvoiceNow, the nationwide e-invoicing network, was launched by IMDA in 2019 to further digitalise the economy and attain the benefits that e-invoicing brings to businesses, including efficiency improvement, cost reduction, faster payment cycles and being environmentally sustainable. InvoiceNow can help businesses which are not on e-invoicing to start doing so and is an additional option for businesses which already have their own e-invoicing solutions. While businesses do not need to adopt InvoiceNow to be paid more promptly, InvoiceNow is aligned to international and national standards and allows businesses a wide variety of solutions to choose from. Since January 2020, the public sector has taken the lead to onboard InvoiceNow as the preferred channel, in additional to the existing Vendors@Gov portal, for vendors to submit e-invoices to agencies. To date, more than 40,000 locally registered entities have signed up for InvoiceNow, over 7,000 of whom are public sector vendors.”
“On top of the Government providing JSS support, Government agencies, such as Enterprise Singapore and Singapore Tourism Board, have been working alongside various stakeholders, such as the Singapore Association for Conventions & Exhibitions Organisers and Suppliers, the Association for Catering Professionals and the Singapore Food Manufacturers' Association, to help companies emerge stronger from COVID-19, by embarking on transformation efforts and pivoting to new business models. A range of grant and loan programmes are available for companies to obtain financial support, including the Enterprise Development Grant (EDG), Productivity Solutions Grant (PSG) and the Temporary Bridging Loan Programme (TBLP). Companies have tapped on these grants to innovate, increase productivity, as well as build digital capabilities that would enable them to venture into new business concepts and develop new business models. Beyond financial support, facilitation and advisory services are also available to help companies to continue to identify growth opportunities in foreign markets and internationalise.”
“The protracted COVID-19 pandemic has been a challenging period for businesses. Recognising that some sectors, such as Food and Beverage (F&B), would be negatively impacted by tightened safe management measures (SMMs), the Government enhanced the Jobs Support Scheme (JSS) for these sectors during this period. Food manufacturers, caterers and event companies that were badly affected by the SMMs can appeal for the higher tier JSS. The entire category of companies cannot be automatically included because the industry classification (Singapore Standard Industrial Classification (SSIC) codes) does not fully capture the range of activities that companies may undertake, or their main customer segments. For instance, many event companies tag themselves under “Audio/Video Equipment Rental1” and not the SSIC for event companies. Another factor is that SMM restrictions do not affect companies uniformly. For instance, food manufacturers that supply to F&B outlets may be more affected than food manufacturers that provide to supermarkets or overseas markets. As such, we exercise flexibility via appeals, and have extended the enhanced JSS support to companies which fall outside the stipulated qualifying criteria but are in genuine need. Companies can submit an appeal online and we will assess each case based on the merits of their circumstances. Since the start of JSS, we have extended enhanced JSS support for close to 4,600 companies. Even as we gradually reopen the economy in a safe manner, there will be permanent changes in the way businesses are conducted and in consumer behaviour. Businesses cannot assume they are able to return to pre-pandemic modes of operation.”
“To compute the effective tax rate, we use chargeable income before group relief, loss carry back, partial tax exemption and startup tax exemption. Chargeable income, defined under section 38 of the Income Tax Act, is the figure after taking into account group relief and loss carry back but not partial tax exemption and startup tax exemption. It is used for calculating the partial tax exemption and startup tax exemption that companies are eligible for, and, eventually, the corporate tax that companies are liable for. We use chargeable income before these four schemes, so that the effective tax rate correctly reflects the tax burden of the company after factoring in the tax savings provided by these schemes. To illustrate: Suppose a company’s chargeable income before these schemes is $100. If these schemes did not exist, it would pay $17 tax with our corporate tax rate at 17%. Its tax burden or effective tax rate is 17%. Assuming that these schemes reduce the company’s chargeable income to $50, the company would pay 17% on $50 or $8.50. By using chargeable income before these schemes or $100 in this example, the ETR is 8.5% ($8.50/$100). This correctly reflects the tax burden of the company after taking into account the effect of these schemes. If we had used chargeable income after these schemes to compute the effective tax rate, we would have ended up with an ETR of 17%. This would have negated the effect of these schemes, which serve to reduce the tax burden of the company. The effective tax rate is calculated for each company. There is no netting off of losses of loss-making companies against the chargeable income of other profitable but unrelated companies.”